Posts Tagged ‘A.M. Best’

There are indications that new A.M. Best Stochastic Based BCAR factor assignments may require more capital for companies entering a new line of business than for established writers growing in that line

Companies will be under extra pressure to choose growth strategies carefully because of potential capital pressures from A.M. Best and their potential for low returns due to the extended soft positions of many markets

With current capital positions evaluated, robust and current market insight is critical to accurately assess potential growth areas

There are indications that new A.M. Best Stochastic Based BCAR factor assignments may require more capital for companies entering a new line of business than for established writers growing in that line

Companies will be under extra pressure to choose growth strategies carefully because of potential capital pressures from A.M. Best and their potential for low returns due to the extended soft positions of many markets

With current capital positions evaluated, robust and current market insight is critical to accurately assess potential growth areas

As A.M. Best implements a new rating methodology with enterprise risk management (ERM) as a specific rating category, risk tolerances will play an increasingly important role with the potential to further differentiate risk profiles in Best’s evaluation of companies’ risk and capital needs. Risk tolerances will likely positively impact a company’s ERM evaluation when A.M. Best deems the company’s risk tolerances as adequate and appropriate.

Insurers have long embraced the concept of risk tolerances. In some cases, the risk tolerances were expressly stated in a company’s enterprise risk management (ERM) policy document or in other cases exhibited in the course of normal operations.

Insurers have long embraced the concept of risk tolerances. In some cases, the risk tolerances were expressly stated in a company’s enterprise risk management (ERM) policy document or in other cases exhibited in the course of normal operations.

Maintaining or improving ratings is a priority for most insurers. This can be challenging amid increasing demands for companies to “own their risk” (Own Risk and Solvency Assessment “ORSA”) in an environment of evolving rating agency requirements, including A.M. Best’s (Best) proposed ratings methodology and Stochastic-based Best’s Capital Adequacy Ratio (BCAR) criteria.

Industry Accelerates Risk Profile Analytics and Development of Their Own Risk Tolerances and Stochastic Capital Modeling

The launch of A.M. Best’s (Best) new ratings and Stochastic-based Best’s Capital Adequacy Ratio (BCAR) draft criteria became an inflection point for (re)insurers worldwide. The 2016 changes represent Best’s first major overhaul in over 20 years and are leading to a growing number of changes in market behaviors across the company size spectrum. (Re)insurers are assessing their risk and capital management positions in anticipation of the impacts of Best’s new requirements even though the changes will not result in massive differences in its published ratings nor likely become effective until later in 2017, according to Eric Simpson, Managing Director and Mark Murray, Senior Vice President of Guy Carpenter.